Wirepas Wirepas Blog IoT is an ecosystem play

April 27, 2016

IoT is an ecosystem play

By Wirepas

The idea that one company could possess all the technologies, competences and wisdom within its own walls is outdated, even absurd. The fast changing and fragmented business environment of today calls for ecosystems of companies that share a vision and have complimentary assets and skills. I argue that this is particularly true for Internet of Things (IoT)

At the core, the basic idea of IoT is quite simple. It is all about connecting vast amounts of devices and utilizing the data in order to do things better. It holds a great potential in terms of efficiency and new services – in terms of making the world a better place. It is a good new story, but an evolving one.

I believe that successful business ecosystems can be extremely efficient in terms of flexibility, scaling and value creation. Nowhere is this clearer than in IoT business that is a fairly young, fast developing and fragmented market where new technologies and new use cases emerge almost daily. At the moment it is difficult to name any company that would be able to offer turnkey IoT solutions for its customer - without an ecosystem of companies.

Let’s take a look at a widely deployed IoT application, smart electricity meters as an example. Firstly we need a smart meter manufacturer. To be able to connect the smart meters we need radio hardware and a protocol for the device communications. Then the data needs to be collected with cellular, WiFi or Ethernet connection to a database that can be local or cloud based depending on the requirements and preferences of the end customer. After all this is done the magic of IoT can happen. The data can be analyzed and the process improved – we can learn.

The same competencies are needed basically in all IoT applications such as asset tracking, sensoring and logistics. We need device manufacturers, radio hardware, connectivity protocols, database or cloud providers, IoT platforms, analytics and system integrators. And we need these competences to come together and unite for a joint goal – the end customer’s business need.

Something new, something old

For industry, the IoT introduces a paradigm shift. It will change what we mean by a product. For hardware product the life cycles will remain long for obvious reason, namely CAPEX. IoT actually holds the potential to prolong the lifetime of the hardware because it enables improvements even for the products already installed in the field. At the same time the new connected industry enables shorter product cycles for software. The main point of IoT is still about learning and learning faster than was possible before.

Yet, many things have remained the same. The end customers still prefer to buy their products and services as easily as possible and often from as few vendors as possible. One stop shop offers among other things a clear and straightforward division of liabilities. Because of this we need ecosystems with clear leaders.

I actually think that a core competence of businesses of today is to be able to build and also lead ecosystems of companies around them. And not just any set of companies, but companies that have unique technologies and competences and that furthermore share their vision and core values.

So what does this mean for IoT ecosystems? The best way to build a business ecosystem is to build it around a concrete customer case. On top of that a successful ecosystem shares a vision or a target. Its companies have complimentary assets and competences. And at the end of the day it creates value for which the end customer is prepared to pay for.

This is obviously on a very high level. On a more concrete level the different technologies need to be interoperable, the business models need to be complimentary. There also needs to be a clear division of value and liabilities among the players in any given ecosystem. For this the companies need to come together and agree on terms.

At the same time the ecosystems should be flexible and not rush in to locking solutions, technologies or business models. There should always be room for innovation and new better technologies because the important thing in ecosystems (natural or business) is that they evolve and should evolve over time. The best solutions should win.

In natural ecosystems things organize themselves in the most efficient, optimized and simple way to fulfill the need at any given time – nothing more, nothing less. This is also what IoT ecosystems should be all about.

- Sebastian Linko, Vice President Marketing and Communications at Wirepas -